Cryptocurrency

Mass adoption of SegWit for Bitcoin would have a guaranteed 40% savings in commissions


Key facts:

A report of Veriphi says that the exchange houses need to activate the software in order to be competitive. Until now, the percentage of transactions that used the tool in the network has not exceeded 60%. The consultant Veriphi published a report on 27 may, in which he points out that a complete adoption of addresses SegWit, or Segregated Witness in the network Bitcoin, would have allowed the users a saving of up to 40% in commissions. The team of the canadian firm discusses the benefits that would have been achieved with a massive adoption of SegWit. He comes to the conclusion that the savings is so significant, that those who make large transactions should consider implementing the tool immediately, in order to remain competitive.

The advantages brought about through techniques of management fees optimized as SegWit are most impressive, especially during high periods of transactional activity. A large percentage of what was transferred it would have saved a few months after its implementation. The actors of the bitcoin market, such as exchanges, must be considered seriously enable them to take advantage of their advantages. Veriphi.

In the Criptopedia, is defined to SegWit as a software update compatible with earlier versions of Bitcoin. With this update, each block in the chain has a new structure, known as a witness and placed apart from the tree of Merkle transaction Bitcoin. For each transaction, the data of the signatories, and scripts are moved to this structure, by separating such information from the rest of the data of the operation. The name of the Witness-Segregated” due to the segregation of firms that, although they are needed to validate transactions, are not decisive for the effects of transactions —to know more about SegWit, visit this section of Breaking News—. Analysts Veriphi mentioned the benefits obtained with the implementation of the transactions SegWit in the network Bitcoin. Detail a wide range of features, many of which are highly technical. Summarizing some of the benefits we can say that SegWit, in addition to lowering the rates of the commissions, exceeds certain restrictions of the protocol to allow for the malleability of the transaction. This is because it allows users of bitcoin to move the parts malleable of the transaction, that is to say, moving to the witness of the operation and segregarlo so that the changes do not affect the calculation of the txid, which is the hash hexadecimal 64-digit number called a transaction id. In addition, with the implementation of this technological tool has increased the size of the block, doubling the capacity of the network.

When do the mass adoption?

Analyzing the data of the adoption of transaction SegWit, the team Veriphi divides this history in three periods. The first mark your beginning, when the acceptance was below 20% during the first quarter of 2018. The second stage began in march 2019, a time in which highlights a turnaround of up to 45% in operations related to addresses SegWit. The third period began in September of 2019, with a range of up to 60%, although it has recently decreased. The report notes that from January 2020, has not fallen below 40% and has even been exploited more than 50% to reach the 55% as of march 23, 2020. The graph shows the evolution in the use of addresses SegWit in the network Bitcoin. The adoption has not managed to overcome the 60%, although it is currently at 46%. Source: Blockchain.com. In an effort to speed up this process of adoption, Aaron Lasher, co-founder of RBD (Bread, one of the purses most popular Bitcoin), along with other executives, in September of 2018 launched a web site called “WhenSegwit” —in Spanish, “When SegWit”— in which they published an open letter to lovers of Bitcoin. In the letter they beg, both for enterprises as for users, prioritize the enhanced services of SegWit and that “to adopt SegWit 100 percent”. In the document highlights a question why SegWit has not reached 100% adoption?, the answer is a few characters after: a reason could be the lack of sufficient incentives. This is due in large part to that as any update is compatible with previous versions —also called fork soft—, SegWit ensures that participants in the network Bitcoin that have not been updated to the same software, they can follow the same network only under a set of rules to be slightly less restricted. As a result, some companies and exchange houses in bitcoin have postponed the change to enable transactions SegWit, despite the advantage of low rates that presents to send payments with the first of cryptocurrencies. Given that SegWit affects the weight of the transactions, the companies and the exchanges require an update of the software so that users can send and receive transactions from bitcoin-enabled SegWit from a string of 26 to 35 alphanumeric characters. The lack of incentive limits the adoption of Segwit, by more beneficial it can be for its users. Source: johan10/ Envato Elements. This can be done in two different ways. First, companies can re-use an older update that exists since 2012, called the hash of payment to script (P2SH), or you can do it with the version Bech32, which even is promoted in the open letter of the site WhenSegwit. Originally, P2SH was a way of compressing the complicated conditions of payment associated with the transaction of bitcoin, but then the developers took advantage of it to ensure the interoperability between the addresses that do not support transactions SegWit and those that do. The version Bech32, created by the developer of Bitcoin Core, Pieter Wuille and the CTO of Blockstream Greg Maxwell, is not recommended at present until its use is more widespread, as points Bitcoin Wiki. It is an implementation more difficult to SegWit to enable. That said, Bech32 is, in fact, more efficient than P2SH. This is because, unlike Bech32, which was launched in February of 2018, P2SH is an update reused in 2012 that it was not designed natively to support SegWit. As such, the subsequent update actually processes the transactions SegWit in a more indirect way that Bech32. So, for what has been analyzed up to now, it seems that the development has advanced at a rapid pace and is expected to offer its benefits, to the extent they advance the adoption.

About the author

Caroline W.

Caroline W.

Caroline is passionate about learning languages, cultures and the Internet. She has years of experience working at international online advertising projects. Growing interested in Bitcoin and cryptocurrencies in late 2018, she joined CurrencyMarket24 as a writer.

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